The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
Feb. 19--Stroudsburg Area School District's preliminary budget is balanced on paper, but the district is still facing a nearly $5 million shortfall going into 2014-15.
"What we do for the preliminary budget is we submit a balanced budget to the state, showing them what we would need in additional revenues to continue the same programs that we have," said Business Manager Don Jennings.
"In the past, if we've arbitrarily reduced expenditures to balance the budget, the state turns around and spins it that we don't need any money."
The board plans to vote on the proposed budget during its regularly scheduled meeting at 6:30 tonight in the high school cafeteria.
The budget lists $103,777,571 in expenditures and that same amount in revenues. But the board anticipates only $99,095,417 in revenues going into 2014-15.
The district's current tax rate is 157.36 mills, generating $66.8 million in revenue. According to the proposed preliminary budget, the millage rate would need to be raised to 169.04 mills, generating $71.7 million to make up for the shortfall in revenue.
It's the board's goal, however, not to raise taxes, Jennings said, adding that the proposed preliminary budget doesn't represent the final budget the board will adopt.
Even if the board was going to raise taxes, the state imposes a cap on how much taxes can be raised.
In Stroudsburg's case, the cap would prevent taxes from being raised beyond 2.7 percent, or 161.6 mills. That would still leave the board about $2.8 million short.
"Between now and June, the board has to decide on some combination of reduction in expenditures and increase in revenues that will balance everything," Jennings said.
The district has made significant cuts in recent years to keep up with budgetary demands.
Any further cuts to staff or programming will definitely affect the quality of the students' education, Jennings said.
"On a regular basis, year after year, we work on being the most efficient that we can with our expenditures, but when you have significant increases every year in the retirement rate and health insurance costs, you get to the point where the only way you can pay those increased costs is to reduce your programs," he said.
The biggest increases in the district's expenditures are for personnel benefits and property costs.
Property costs are expected to increase from $787,020 to $1.3 million in 2014-15. The board approved a measure designating the first $700,000 of any money left over from the current year's budget to go toward the purchase of new school buses.
In preparing the preliminary budget, Jennings assumed the board would want to replenish the money it set aside for replacing school buses, but that doesn't mean it has to.
The next biggest cost is personnel benefits, which will increase from $24.8 million to $28.8 million.
Retirement rates are also expected to increase 4.5 percent, or about $1 million, while medical costs will increase about $720,000.
"That's just increases in what it costs to provide medical plans all over the country" and not necessarily related to the implementation of Obamacare, Jennings said in an interview last month.
The district is anticipating more state aid, but that won't be clear until the state's budget is passed in June.
"We may have an additional $1 million from the state, and the government has also proposed reducing the amount of the retirement increase, which would gain us another $500,000," Jennings said.
In the meantime, the district continues to weigh its options. Most recently, Stroudsburg has looked at the possibility of closing school buildings. During a public hearing last week, district officials announced closing Ramsey and Clearview elementary schools would save $659,000 per year. The board now has 90 days from the time of that hearing to weigh a decision.
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